Jack Weber

New Trends Under the New Deal

(July 1934)

From New International, Vol.1 No.1, July 1934, pp.16-17.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

STARVATION in the midst of plenty, that distinguishing mark of the capitalist system of production, is intensified a hundredfold during a crisis. The tremendous power of organized factory production produces commodities far beyond the possibilities of control by the profit system. The anarchy of overproduction for the market brings about a catastrophic fall in prices, the shutdown of plants, widespread unemployment for the masses of workers, bankruptcies, disruption of world trade, disturbance of the monetary system, the frantic search of capitalists for new outlets and new markets. In the past the bourgeoisie overcame the general crisis by the wholesale destruction not merely of surplus commodities but of machinery and means of production, as well as by conquering new markets and intensifying exploitation of the old.

In the present crisis the old laissez-faire method of recovery no longer suffices. That method worked in the hey-day of “free competition” when capitalism could still expand. The present epoch has witnessed the virtual destruction of free competition, the growth of monopolies, the division of the world market among international capitalist combines. The national capitalist states, taking on a corresponding imperialist structure, have divided the entire earth, with the exception of China, into politically controlled territories for exploitation. Capitalism as a world system has no further way of expanding, all its forces have been developed and it has reached its decline.

The NIRA can be understood only against this world background. Forced reluctantly and despite itself to treat the means of production as social, insofar as this is possible under capitalism, the bourgeoisie has had to permit the government to step in not merely to supplement but to direct recovery and to wield its police powers to salvage the wreck. Behind all the regulations of the “authoritarian” state is the simple program of restoring profits to the capitalists, of pumping new blood into the weakened frame of capitalism. In accomplishing this purpose, the government, as executive committee of the capitalist class, faced the task of halting the seemingly never-ending drop in prices, and of driving down the living standards of the masses of workers and farmers in order to place the national capitalism in a stronger competitive position.

To stabilize industry (which means to render it static and unprogressive), Roosevelt was compelled to follow the inevitable trend toward ever greater concentration of capital. Cartels, resorted to previously by financiers to stop losses due to competition and to bring in maximum profits, are established on a national scale. This truce in industrial warfare ratified by the system of codes permits the regularizing of production schedules, the apportioning of quotas, fixing of prices (under the mediaeval concepts of “fair competition” and “fair price” indicative of decay). Under the codes the control of the cartels is handed over to the tender mercies of big finance capital which acts to concentrate its power still further by squeezing out the little fellows in accordance with the dictum of Proudhon that “Competition is civil war, and monopoly a massacre of the prisoners”.

To start the wheels of industry going, the capitalist government pours rivers of gold in the form of loans, subsidies, orders into the banks and trusts. The state budget takes on undreamed-of proportions. Its balancing becomes ever more precarious and in fact impossible. The national debt increases at a dizzying pace. Taxes become an unbearable burden to the middle class, especially to the debt-ridden farmers – on whom, with the working class, the entire back-breaking load of the crisis is laid – and this at a time when they can least afford to pay. The big bourgeoisie evades and escapes taxation – the Morgans and the Rockefellers pay little or nothing. The problem of obtaining money when hard cash is scarce, the problem of increasing the national debt and yet casting it off, of expropriating the middle class while releasing big finance capital from debt (throwing off of bank deposits, insurance, stocks, and bonds) is solved – presto! – by inflation. The big bankers not only defend themselves but profit anew (note the vast stream of gold that flowed back to America when the dollar was temporarily “stabilized”). Inflation is used to stop the fall of prices and to reverse their trend. It acts as the subtlest means of wage-cutting, for the cut goes into effect over a prolonged period as the inflationary process makes itself felt throughout the price system. Depreciation of the dollar is a powerful way of regaining foreign trade and of meeting the monetary manipulations of Japanese and English capitalism. But inflation is a dangerous weapon to capitalism for it is a cumulative process beyond the control of any single national state, since no one state controls world economy. Instead of stabilizing the national economy, inflation introduces new disturbances and repercussions, each requiring fresh intervention by the state.

The benefits to finance capital of trustified industry depend upon mass production, upon socialized production on a vast scale. The exploited masses at home cannot absorb the tremendous surpluses resulting from this type of production and they must be sold abroad. The fierce competition of expanding imperialist capitalism results, and leads to a combined system of high (protected) prices in the home market and dumping of goods at low prices abroad. This chaotic price structure introduces unbearable stresses and strains into world economy and disrupts foreign exchange. The bourgeoisie, whose first historic act of power was to stabilize the currency, is forced in its decline to introduce all the uncertainties and chaos of “managed” (manipulated) currencies. To preserve the home market for its own national capitalism against dumping, each country sets up high tariff walls, restrictions, import and export quotas, embargoes. This system of “autarchy”, due to “planned” dumping, leads to the almost complete disruption of world economy. American capitalism, hit the hardest by the crisis because of its advanced technique, is preparing the machinery (export banks, tariff power to Roosevelt) to take over imports and exports on a national scale. To what extent these further weapons of state capitalism will be adopted depends on the extent of liquidation of the crisis in the near future. There can be little doubt that the inevitable war, clearly visible just ahead, will inaugurate rigid state control on an unprecedented scale.

The capitalist “planned economy” of the NIRA is totally different from that of the Sovie| Union which has released the forces of production from the fetters of the profit system and permitted them to expand on a grandiose scale. Roosevelt’s method is shot through and through with reaction and exposes to full view the decay of modern capitalism chained within the national boundaries. The NIRA is the organizing of waste, the sabotage of production, the restriction of output – in its ultimate aspect it is the organizing of mass hunger for greater profits. The American farmer, in competition with the backward spots of the earth coveted by US imperialism, is asked to go out of business to the extent that this is safe for capitalism. For a reserve army to be used against the working class in revolt, subsistence peasant farmers are to be created, producing not for a world market but for themselves. The NIRA and the AAA, far from solving the agricultural crisis, intensify it still more. The present world-wide drought aids the program of imperialism for the farmer on the one hand, but on the other unbalances the state budget still further, so that the spectre of unlimited inflation hovers over the entire “recovery” program. The NIRA emphasizes all the disproportions that exist in present American economy, giving greater power than ever to vast monopolist empires over the rest of economy. The Roosevelt program is unreservedly the program of imperialism.

Embodying the same needs for national capitalist salvation that drove Italy and Germany to Fascism (the state system of reactionary imperialism resulting when the workers fail to achieve power through the proletarian revolution), the Roosevelt program nevertheless still operates behind the screen of bourgeois democracy. Whereas the crisis in Germany found a working class disciplined and organized in powerful unions and political parties which could offer organized resistance to the beating down of wages and living standards (a resistance that, under proper Communist leadership, could have resulted without question in the taking of power by the proletarian dictatorship), here the workers are poorly organized and extremely backward politically. Here the bourgeoisie can still rely on the method of democratic illusions to balk and bind the masses and to carry out the will of the ruling class.

Bourgeois democracy is long on promises for mass welfare, short on performance, so that there is an ever recurring contradiction between words and deeds. The organizing of capitalist industry into powerful cartels to deal effectively with labor in revolt is called “self-government in industry”. The vicious capitalist drive to beat down the living standards of the workers is conducted under a barrage of propaganda concerning raising these living standards at the expense of profit. Roosevelt talks of increasing the purchasing power of the masses by raising wages and decreasing unemployment – and then proceeds to have industry adopt the stagger plan which puts the burden of unemployment on the employed workers. With the shortening of hours and the increased hourly rates, the worker finds himself short one week’s wages out of every four. And the boss class saves the difference without more than a pretense of hiring more unemployed. When wages do go up, inflation steps in to drive up the price level much faster than wages with the result that the worker receives less in real wages. Roosevelt is engaged in “spreading the national income” – by emptying the treasury into the pockets of the big financiers (RFC, PWA, etc.). Mouthing the phrases of a “social program”, Roosevelt avoids unemployment insurance and adequate relief (they will be left for that elusive “next session” of Congress) by a system of starvation relief and forced labor camps (CCC). On the international arena the New Dealers, the Brain Trust rationalizers for democratic capitalism, speak of cooperation and disarmament when they mean the sharpest trade war and arming to the teeth. Industry is “regimented” for the next imperialist war; the army liaison officers are at their posts in industry; the contracts for vast war supplies need only a signature to mobilize the factories for instant service to the war machine.

The main illusion fostered by bourgeois democracy is that of the state as being above the classes, as adjusting the “common” interest. Thus in the NIRA program for saving the exploiting class, an apparent concession is also made to the working class. The 7A clause permits them to organize freely and without coercion or interference from the bosses. In actuality this clause, shrouded in ambiguity from the start, served to lull workers into passivity by making them think that the government would “protect” their interests, to harness the newly awakening labor movement to reformism and class collaborationism, to permit the capitalist government to discriminate against militant unionism, and to involve the workers in that fake mixture of obstacles, delays and strike betrayals so aptly called the National Run Around.

The upturn in business, due in large measure to government spending, permitted workers to organize and engage in renewed struggles to regain the conditions they had lost during the crisis. There took place a tremendous influx into the unions, particularly into the AF of L, which has almost as many members now as at any time in its history. But the upturn gave to the big bourgeoisie, by permitting them the taste of profits, a new sense of power and confidence. When the wave of organization of the workers spread to the unorganized mass production industries, autos, steel, electrical machinery, the Fords and Sloans and Swopes decided that the time had come to put a stop to any further building-up of even the reformist trade unions. Finance capital will brook no resistance to the expansion of profits by the wage slaves! The new unions, “federal” or industrial unions, threaten furthermore to advance the class struggle to a new plane at a bound. Heeding the voice of his masters, Roosevelt proceeded to legalize, by use of the self-same 7A clause, the company unions and through them the open shop. At the same time the slight “recovery” has made finance capital chafe at government control, so that part of the NIRA is being abandoned, but not its essential features.

The club used in the NIRA to subdue the rebellion of the productive forces, breaking through the capitalist integuments, (witness the prohibition against installation of new machinery in textile plants, the shutting off by the militia of oil pipe lines, etc.), descends also on the heads of the workers as the class that represents socialized production in its antagonism to the bourgeois system of private property. The state organizes starvation and unemployment for the proletariat. Within the confines of bourgeois democracy, the working class by its own bitter struggle and bloody sacrifice utilizes the rights won by it to organize opposition to capitalist exploitation, to organize its own democracy in the form of trade unions and political parties. But the bourgeoisie uses its power to tie the new organizations, the elements of the new society within the womb of the old, to the capitalist system by controlling them through professional leaders, labor lieutenants of capitalism in the unions, labor politicians in the reformist mass parties. These “leaders” are experts in organizing sham battles through which they “deliver”‘ (betray) the organized workers to the ruling class. The AF of L bureaucracy, added to the councils of the capitalist government to continue their betrayals, forms the greatest menace to the working class. Unless a Left wing armed with correct policies and guided by a truly international Communist party, is constituted within the trade unions, the influx of workers into the unions will be halted and the reverse process will start. In the present situation the workers are being rapidly disillusioned with the Roosevelt NIRA and in the recent strike wave gave every indication of reliance upon their own organized forces to carry on a militant fight against the capitalist class to regain their losses.

The crisis has uprooted all the “normal” interrelationships of the classes in American society. The middle class, including the farmers, has been pauperized. A lumpenproletariat has been formed out of elements of the middle class and the working class. These are the elements that constitute the recruits for Fascism. The NIRA has not brought and could not bring any real cure for the capitalist crisis. At best it has only laid the basis for a new and even worse crisis in the nearest future. Starting as a struggle over collective bargaining the present conflict between the working class and the capitalist class may very well assume larger proportions and take on a mass character. The struggle for the closed shop can easily develop into one for workers’ control of production, for nationalization of industries, for “state socialism” instead of state capitalism.

The NIRA, still organizing the forces of capitalist industry under a form of “autarchy”, will inevitably become more and more openly imperialist under the explosive character of forces of production that demand expansion. Intensive preparations take place for war. Imperialism expands its markets abroad at the expense of the living standards of the masses at home. Imperialism means the end, sooner or later, of all democracy, it means outright Fascism. The economic program of imperialism thus gives rise to its, political counterpart. Only a new internationalist Communist, party can organize the struggle against imperialism, Fascism and the imperialist war. Only that party can lead the workers to victory and establish the dictatorship of the proletariat. Then only will it be possible to really plan economy.